Home is Where the HEALTH is
Home is Where the HEALTH is
Mergers and Acquisitions - the Associated Challenges and Benefits
In this episode, Compassus' Chief Development Officer David DeGumbia breaks down mergers and acquisitions, or M&A, and the associated challenges and benefits for health systems all the way down to patients. And don't miss David's story on the first patient to have a major impact on his personal and professional journey.
Hi everyone, I'm Ashton Jones and this is Home is where the health is. This podcast brings you the latest news on progress and innovation in the home based healthcare space in association with compasses. At the end of the day every person deserves to be cared for with compassion, whether they're recovering at home, dealing with a serious illness or nearing the end of life in the place they call home no less. That's why every month we feature different subject matter experts, we dive deep into how their work is improving home based health care for patients. In today's episode, we're discussing mergers and acquisitions or m&a with our guest, David de Gambia Chief Development Officer at compasses will address the current health system landscape around home based care. Look at some of the internal factors associated with m&a execution and dive into the effect on patients. And don't miss David's personal story about how this work transforms the lives. There's all that and more coming up on Home is where the health is. Hey, everyone, hope you're doing well today because we certainly are here in the home is where the help is studio. We're already on our third episode of the podcast and so grateful to all of you for tuning in. Every month, I have our guest David to Gambia Chief Development Officer at compasses here with me, David, are you prepared to entertain and inform our audience?
Unknown:Possibly Awesome. Thank you for having me, Ashton.
Ashton Jones:Yeah, of course. Well, it's great to have you here. And I wanted to start off today's show by giving our listeners a little bit more information about your background. So from what I know, you told me that you started as a physical therapist, is that right?
Unknown:That's correct. So I am born and raised in Connecticut, still live there. Grew up and live in the same town today, I raised my children there who are all grown now. But so I'm basically a homeboy. But I started out as a as a treating physical therapist, and started in home based care. So working on integrated teams with with nursing, occupational therapists, social workers, and the like taking care of patients in home. So that's where I started my career. I went on to orthopedics and sports medicine, and then on to operating multi site businesses across the country.
Ashton Jones:So your current position is Senior Vice President, Chief Development Officer at compasses, why don't you tell us a little bit more about your role and the value that your team brings to the organization.
Unknown:So Ashton, my key focus is are really two areas. And that's acquisitions, and joint ventures with health systems. So when you when you break that out, and let's just take a look, we'll start with the acquisition side. We are out there, my team and myself, we are out there looking to acquire businesses that fit our strategy that have a great culture, businesses that have really strong employees and leadership and we would like them to join and become part of the compasses team. On the joint venture side, we're looking for like minded partners, we're looking for partners that that we share their vision and vice versa, and that that partner is committed to advancing home based care like we are.
Ashton Jones:Well, on that note, let's go ahead and jump into our first main topic of the day. And today we're talking about mergers and acquisitions. So starting off, David, how does Home Based Care fit into the larger healthcare ecosystem?
Unknown:Wow, that's a that's a great question. Right now. We've talked about the evolution of home based care and where we are today. When you take a look at at the nuts and bolts, what what makes home homebase care? Roll or what makes it tick, it's the people right? It's the clinicians, the nurses and the therapist and the occupational therapist and speech therapist in the social workers. Working hard to to make people independent, to create independence for People at home. And so that that's not going to change. What's going to continue to advance is our capabilities to take care of higher acute patients at home. And so that drives right back to the health, the larger healthcare ecosystem. Health Systems are looking at home based care and saying, Wow, they play such an important part of our acute health care system, our acute hospital because they're helping us with throughput. They're reducing our length of stay. They're reducing readmissions. So they're realizing that home based care is so important to their ecosystem. And we're committed our strategy is to continue to advance that effort to be able to take care of higher acuity patients at home.
Ashton Jones:Well, taking those insights, how has the landscape of healthcare mergers and acquisitions evolved over the past couple of years and what factors have really contributed to those changes?
Unknown:I follow the m&a trends pretty closely. And so there's ups and downs. If you take a look at at at home base care, as well as other health care platforms, midway through 2020 21 into 22 things. The level and the amount of acquisitions were substantial, particularly in the home based care space, and valuations for those businesses were sky high. Things today have calmed down a bit for sure. valuations have come down the level of m&a activity in the home based care space has has sort of norm I would call them normalized. But for compasses and I think we'll talk through later, we're not just looking to buy to add more businesses we are we have a strategic formulaic approach to growing this business.
Ashton Jones:That's a great segue for this next question, which is how does compasses approach evaluating potential merger or acquisition targets? And what criteria do you consider when assessing and, you know, trying to figure out, are they compatible and strategic fit?
Unknown:Yeah, so I'll take the big our biggest buckets that we look at right now. So from an acquisition standpoint, where we start is when we look at potential companies to buy whether it's one agency, or 180 agencies, it's the exact same thing it's does it fit our strategy? And then on the joint venture side, so we have a part of our thesis strategy is we believe that we can partner with large health systems to work with them in the markets and create a pretty special Home Based Care platform. And so that's the same thing where when we evaluate those, we're deciding, are we aligned with their goals? Are they aligned with ours? And is our mission the same? And so that's how that starts.
Ashton Jones:So is compasses only focused on larger health system joint ventures m&a? What would you say to that? Yeah,
Unknown:great question, Ashton. The answer's no. So we, myself and my team, we're looking at single agencies, where the founder of that of that business, whether it be home health, or hospice, or home infusion is still there, and they're looking for opportunities, or they're considering opportunity. So I'll give you a quick example. I acquired a business in the Northeast, and it was a result of a three year relationship with the three partners that were there. So we started off with a conversation to say, let me tell you about compasses. And I want to hear about your organization and in what makes you guys tick and and would it be a good fit to come over to compasses to be acquired, or, or at least a portion of your business be acquired by compasses. So that's how these things start. They generally don't start I want to sell my business. And we write your check and we buy it. So in a lot of cases, it takes time to build relationships, and it's it's a fun part of my job. It's what I love to do, because I like to to understand if we're aligned if we're going to create value for those founders and for their employees because they built the business with their team. And so it's important to make sure that that it's a right fit all around doesn't mean that every acquisition is going to be perfect, but it really helps to start to build those relationships and understand their culture and understand that they're aligned with with our goals moving forward. And we're also looking at at medium sized companies, regional companies, whether it be within one state or continue contiguous states. And then we're also looking at some of the bigger transformational type transactions that would add a lot of territory and patient capacity to compasses. So to answer your question, we are looking at all all ends of the spectrum. While going
Ashton Jones:along with that, can you provide an example of a successful merger or acquisition that compasses has been involved in and then what were some of the benefits that came after to the organization?
Unknown:So in 2020, Ashton compasses, joint venture with ascension at home, that was a sentient home based care business. And it was very, it was transformational for compasses because it was our first large joint venture with a health system such as ascension and ascension ranks as, I think the third or fourth largest health system in the country. And so it gave us an opportunity to take the best of ascension and the best of compasses and bring that together as a joint venture, which ultimately benefited the employees, we were able to create a stronger network retaining patients. And treating treating higher acuity patients at home, we continue to advance our products with ascension is just a great collaboration to work with such an esteemed healthcare partner. And so it's every day we continue to learn we continue to collaborate with the ultimate goal of advancing care home based care within the communities.
Ashton Jones:And in this rapidly changing health care, industry and environment. How does compasses adapt its strategies to stay ahead of emerging trends and challenges?
Unknown:Good question. compasses, I would say, from my standpoint, I believe that, that we're part of those trends. Part of our mission is to make a positive dent in the universe of home based care. And you spoke with Jordan and Jeff, when you take a look at our product side, when you take a look at our clever core services. Those are roll up our sleeves and do it unbelievably well. But when you take a look at the advanced products, such as snip at home and taking care of higher acuity patients, and advanced care management, and then leaning hard into value based care and creating narrow networks with with health systems, so that we could take care of more patients within a community and allow them to recover at home.
Ashton Jones:We're gonna take a quick break from our main discussion to share a story with you. And the reason we want to spend some time on a single story is because when you're looking at the big picture, it's so easy to forget about all the people who are impacted by this work. And at the end of the day, it's really about touching a life. Before we get started, I did ask David to come prepared with a story to share with all of you something that has really impacted him both professionally and personally. So David, do you want to get us started on what your story is about?
Unknown:Yeah, so I'm gonna go all the way back to when I first started as a physical therapist, taking care of patients at home. So one of my first cases, first assignments was taking care of a stroke patient and let's her let's call her for the sake of this conversation. Her name was Tess. And so Tess had pretty significant stroke, right sided if I remember correctly, and I had the ability or had the opportunity to work with the RN, team, social workers, occupational therapists, speech therapist, and so our our goal was to create an environment in her home where she was saved, and was able to return to her activity, activities of daily living. At the time, I was an aspiring wine collector, amateur wine aficionado and she was a longtime collector. And so we actually adjusted our physical therapy schedule so that she was my last patient of the day. And after our session, she would share bottles from her cellar and part of the therapy was walking down in the doing the stairs and walking down into our cellar and choosing bottles of wine for us to sample after we were done with treatment to move this story along, on on her last day we all got together when we were discharging her. And so it was sort of a send off for her because she had made such Ramat miraculous gains that everybody wanted to get together. And so she shared with us a bottle of French burgundy. And it was, it's called Domaine de La Romana content, which is a very rare burgundy. And so when we were getting near the end of that, that night, she started getting very emotional. And so we were all just comforting her and saying, listen, we're gonna keep in touch with you. And don't worry about we're here if you need anything, and she says no. She said, That's not why I'm emotional. This is the last bottle of Domaine de la Romani. She has just just a wonderful sense of humor, and we all cracked up, she was just trying to lighten us up. But I bring up that story because I love wine. And she was one of my early wine mentors, but it really goes to the heart of home based care, she, we were able to help her get back to her normal ADLs. And she had a pretty severe stroke. And so that's why I have just such respect for our clinicians, when when I'm able to get out in the field and visit them because I know what they do. Every day, I've had the opportunity to walk in their shoes, and I just, that's what this business is really about. I just have the utmost respect for our clinicians. And it's exciting for me to spend time with our clinicians. And because they're not, they don't, they don't just love what they do. You can just tell they're meant to do that job they are meant to serve patients in their home.
Ashton Jones:Well, let's go ahead and jump back into our main discussion about m&a. And we're going to pivot a little bit this time and look at some of the external and patient facing effects. So David, how do you ensure that the integration of acquired or merged entities really aligned with compasses, mission, vision and values? Great question.
Unknown:You can buy businesses all day long, you can joint venture all day long. But if you don't integrate properly, you're going to start off in a hole, and ultimately, employees and patients will suffer. So from an integration standup standpoint, the nuts and bolts of of Consummating a transaction, you can run into problems there. But that usually works itself out. If you make mistakes during the integration progress process. It's not as easy to fix because you are dealing with with employees and patients within the community that that have to trust you. So integration is just so important. And you know, from a high level, how compasses does it. We're authentic. It's authentic leadership, we may make mistakes, but we're we're open and honest, we build trust with with our new colleagues and work hard to align our goals and our mission.
Ashton Jones:And how do mergers and acquisitions really impact patient care and access to services? And then how does compasses prioritize patient well being in that process?
Unknown:So when you take a look at how mergers affect the community, the patient base, we would say that when we are acquiring or joint venturing, we're doing it for a strategic reason. And that strategic reason is that we can serve those patient communities at a higher level. Let's not forget, healthcare is local, no matter how big your company is, how many states you operate in health care's logo. And so the first thing that has to happen when when you're acquiring businesses and you're advancing these mergers and acquisitions, your light has to be on. So when you think about home based care, you can have the greatest clinicians in the world you can have the greatest strategy in the world, your light needs to be on meaning when a physician or discharge planner, makes a referral. You need to be able to see that patient within a reasonable amount of time. You can't see him while it's the weekend. You know, I'll see him on Tuesday. And when you take a look Look at what's happening with with the nursing shortages, therapists shortages and other shortages that's posing a problem right now. And so it has to be top of mind and has to be top priority.
Ashton Jones:Well, you say that it takes a lot, you know, building on that what kind of challenges and obstacles usually come about during the m&a process? And then how do you navigate that.
Unknown:So that the when you when you look at the steps of the m&a process, there's lots of diligence that needs to be done, and you hit upon the most important point, which is integration. It is building trust within our new colleagues and employees that we're acquiring, as well as preparing to continue to serve their communities, their patient communities and, and elevate that. So mergers and acquisitions for me is really exciting, because it's about something new. It's about advancing homebase care. But it can be scary and challenging for the people that you're acquiring, as well as for our people. Because we're taking on such a such a bigger entity. I work hard, and my team work works hard to make sure that we're sensitive to that, and that we are applying resources early and when needed so that we don't run into lots of HR issues and cultural issues and integration issues. Well, David,
Ashton Jones:now that we're nearing the end of our discussion, what message do you want to leave our audience with
Unknown:key message for me is that this is home base cares time. This is our time to take what's transpired over the last how many decades of home based care which has been great work. But this is our time to advance services within the home. When you take a look at the services that are provided today and will be provided it's going to look like home everything, if you will. But this is our time to shine and be able to take care of patients at home with with higher acuity. Now, it's going to take a village maybe more like a city to be able to do that. But we're we're excited is that we're excited to work with integrated home health systems to bring our services together with theirs in advance the services and products of of home based care so our future is bright home base cares future is bright, which ultimately means patients are going to win.
Ashton Jones:Well, that brings us to the end of this episode of Home is where the health is. today. We talked about m&a and the associated challenges and benefits for health systems all the way down to patients. David, I want to thank you for being our guest and sharing such insightful information on mergers and acquisitions. And for our listeners, we help learning more about this topic in relation to compasses was beneficial to you. If you liked today's episode and you're listening on a streaming service. Go ahead and give us a like and a follow. And be sure to tune in next month for another in depth discussion on innovation in the home based care space with one of our experts. Until then this is Ashton Jones with Home is where the health is. Thanks for listening